Financial Freedumb and Brownie

Well who woulda thunk it. Freedumb doing a book review. That’s like a vegan eating meat. Well, okay, not really, but I haven’t picked up a book book since college.

When I was asked by JLP if I was interested in covering a chapter for his October Project, I was a little hesitant because I didn’t know if I could really finish the book and write a review. Well, I was right. I didn’t finish it, but I got really close, and I plan to continue reading the rest of it shortly. It’s just been a crazy month, but hey I finished my chapter…and quite a few more.

On to the review.

Let me start by saying that this book really surprised me. It wasn’t too technical, but it had a lot of details and examples. On top of that, it had a unique feel to it…almost like it was written by a fellow blogger. It just had some flare to it I guess.

My chapter from The Bogleheads: Guide to Investing was chapter 21, titled “Protect Your Assets by Being Well-Insured.” I don’t have a family, so personally, I wasn’t too intrigued when I got assigned this chapter, BUT I always wondered what the heck life insurance is, so it was a good read.

It starts off with “Common Insurance Mistakes,” a great section. The three mistakes discussed:

• Insuring the unimportant while ignoring the critical
• Insuring based on the odds of misforture
• Insuring against specific, narrow circumstances

When shopping for insurance, even for a car, you loose track of the priorities. So point 1 was a little bit of an eye opener. What exactly are you getting insurance for? The rental coverage? Of course not. We buy extended warranties on our TV, but don’t have an umbrella policy.

This chapter also touches on life insurance–the really confusing world of life insurance. If you’re like me, and never understood a single term used in life insurance, this is the section to check out. The advice is straightforward and honest. I especially like this quote:

If you need life insurance, buy term insurance. Term insurance is basic pay-as-you-go, no-frills insurance. It’s the cheapest way to go and serves the purpose.

Or this one:

It’s common for life insurance salespeople to descend like vultures on young people right out of college. The sales pitch to the new grad goes like this: ‘Buy your life insurance while you’re young and in good health, and the rates are low. When you get older or need it, you might be disqualified due to poor health or unable to afford it.’

“Descend like vultures.” Interesting…You think the author is not a big fan of life insurance sales people? But I appreciate the honesty. I like it.

The chapter then goes on to discuss Long-term disability coverage by bringing up a point I never really considered. “What’s your most valuable financial asset?”

If you’re like me, you’re thinking maybe my savings? Or how about my home? WRONG. It’s your future earning power! Pretty cool huh?

The chapter goes on to discuss: Protecting your property, Long-term care, and of course, locating good insurance companies and agents.

It even ends by offering some tips to reduce the chance you’ll ever have to face them…like not smoking, excercising, wearing seatbelts, getting rest, etc. Wow! Who would’ve though a book titled “Guide to investing” would have advice on wearing seatbelts.

The bottomline: This chapter not only covers “insurance,” but the decisions process you should consider when looking into insurance. It’s written in a fashion that makes it almost seem like you’re right there with you own personal Boglehead.

Make sure you pick one up! The Bogleheads’ Guide to Investing The first step to really protecting your assets is educating yourself. Keep in mind, a free copy of this book is not just making me write nice things…it really was a great read.

This book gets FOUR PAWS from Brownie. Until the next review…uhhh, don’t hold your breath.